How To Use Discovery-Driven Planning At Your Company?

rita mcgrath

In her book, Seeing Around Corners: How to Spot Inflection Points in Business Before They Happen, Rita McGrath provides a specific approach for confronting inflection points once they have been identified. This approach is called discovery-driven planning. Jeff Bezos has observed that seeing inflections points coming is not the predominant challenge. Deciding which direction to take and how to navigate through an inflection point are typically the tougher parts. Most people and organizations had never experienced inflection points, and they are only familiar with the existing business model and business environment. Leaving all that behind is not easy.

Discovery-driven planning helps with that challenge. The idea is to envision a future state and work backward to figure out how to achieve it. This process can be confusing, maybe even chaotic at times, requiring a lot of experimentation. It is best to create as many future scenarios as possible and start testing them to invalidate several of those options.

McGrath advises against planning the action steps in great detail. Instead, the objective is to "plan to learn." An organization should try to capitalize on the upside of its learnings while limiting the cost of "failures," which are not really failures in a true sense of the word. They are just the scenarios that the team learns will not work. McGrath says, "Fail cheaply, demonstrate that your hypotheses are wrong quickly, and continue to see a big upside to your actions."

Digitalization is a great example of what many organizations have been working on in recent years. Approaching digitalization using the traditional rules of the analog world will most likely not work. At the same time, for a company with a low level of digital maturity to throw a ton of funding into a digitalization project could result in a disaster. A better approach based on discovery-driven planning is to utilize "agile" methodologies and create short-term wins. This way, a company can create value along the entire development cycle, rather than only at the very end. Spending tremendous resources on a long-term project hoping that it will all come together in one moment is a dangerous path to take.

Habitual entrepreneurs navigate this process well. They have proven methodologies for gathering information, detecting patterns, testing assumptions, and bringing the necessary resources. They have large networks to help them generate ideas and solutions. Habitual entrepreneurs learn quickly and are not afraid to change direction as they test their assumptions.

The Discovery-Driven Planning Process

As the saying goes, "Fall in love with the problem...not with a particular solution." Consequently, the first step of discovery-driven planning is to articulate a worthwhile initiative that would either create new opportunities for an organization or expand the organization's reach.

The next step is to establish benchmarks and decide what needs to be done operationally to achieve the future state. This is the stage where many assumptions are made and are either validated or invalidated.

McGrath reminds us to plan around obstacles or critical learning moments, which she calls "checkpoints." A checkpoint could be a new regulation that passes, or an experiment the organization decides to conduct. The key is to move through checkpoints quickly as the organization faces a strategic inflection point.

McGrath also disputes a popular myth about innovation. People often think that innovation is about getting a big idea, and once an organization has it, everything will fall into place. McGrath argues that while good ideas are important, organizations have to navigate through the discovery-driven planning process to go from ideation to incubation, where the idea becomes market-ready, to acceleration, which is when the idea is scaled up and incorporated in the company's operations.

McGrath concludes the discovery-planning section by asserting:

"Navigating through an inflection point often means working on two massive challenges at once - bringing the core business forward in its competitive capability and creating new capabilities that will be relevant to the future."

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